How To Not Get Disgruntled Putting In Offers

Question

Hi everyone, looking for some wisdom here!

My wife and I have been putting in offers on multifamily properties in our area since January of this year and have had no luck so far
- Outbid
- Cash offers
- Better terms

This would be our first property together and a house hack. We'd be putting down 5% w/ a 30 year conventional loan (a lot of properties we've seen won't pass FHA) and we would plan on buying and holding

All of our offers have been over the asking price and we've had no luck

Should we put the search on hold and wait for the market to do whatever the market does? Or, continue putting in offers and eventually we'll get one

Thank you in advance

Conner Olsen · Answer

Keep putting in offers! Every no is just one closer to a yes. Talk to your agent/other investors about strategies to put in better offers.

Carlos Ptriawan · Answer

you need to understand your competitor and your market. If everyone is offering > asking with >30% down, nobody even look at your 5% down seriously.  In my market if buyer is giving less than 20% it's automatic rejection.

In my opinion you may be competing to big guys with deeper pocket, you may want to change strategy to regular SF that you can house hack.

Jonathan R McLaughlin · Answer

I was waiting for someone to say what @Dominic Rosato said--5% down is a weak offer that a seller will refuse if they have other options, often even if it is decently over the next highest price. FHA loans are worse, but not by much. Sellers know its trouble.

If you were first time home buyers you could try to highlight that. If you are using the loan to minimize exposure it MIGHT help to show other assets but the above still applies.

Dominic Rosato · Answer

Everyone in this thread is saying some great stuff.

One thing I'll add- The harsh truth is you are going to have to put in higher offers than the people you're competing against. Putting 5% down automatically makes you look like a weak buyer (even though your'e probably not). It's unfair, but that's how the average joe seller is going to see it. So- you're going to have to make up for it in terms of purchase price, waiving contingencies, and other methods above.

One strategy that I recently used was obtaining pre approval letters for 5%, AND for 10% (or higher if you can), just to show we're not scraping this deal together with every last penny. Have your agent/lender show proof to the seller that you're just as qualified as the other buyers.

Jake Andronico · Answer

@Brandon Durant

Don't get discouraged. Offers = deals.

The way an agent presents an offer is extremely important. Maybe (assuming you're using one), try a different agent or a different approach.

You got this!!

Benjamin Carver · Answer

The way I see it... You either pay a hefty premium for speed OR you accept it as a numbers game. If you're getting an offer accepted right away, then I'd argue you are likely not being aggressive enough. Make sure your agent knows what's important to you and that you're exploring ways to make your offer competitive beyond price. Some markets are just really hot and limited inventory right now. Sign of the times. Best of luck sir.

Justin Hammerle · Answer

@Brandon Durant - are you putting offers on new MLS listings exclusively?  If so, could try adjusting your parameters or switching your focus to properties that have been sitting for a while.

Nicholas L. · Answer

How many?

Alecia Loveless · Answer

@Brandon Durant Don’t get discouraged. Some of my best deals have come after multiple offers have fallen through due to this or that with multiple other buyers being first in line before me and the price has dropped and dropped and dropped.

I’ve often waited months at a time before even getting an offer in on a multiple bid situation only to get out done by someone else with a better sounding deal.

Real estate really can be a waiting game. Often the best deals are the ones that you can make happen. Whether it’s spending some time driving for dollars and sending letters to off market owners or really getting to know an agent in your market and getting them to bring you their “pocket listings” which are their agency’s listings that come in and are presented to buyers before they get put on the MLS. You will often have to pay full price or more on the pocket listings but if it’s the right property it’s not always expensive, it may be at the right price, or just need cosmetic upgrades and is less expensive because of that.

I’ve grabbed two of these pocket listings that I offered full price on and the first one after the inspection needed some work and we brought in a very expensive contractor, one I never would have used, but he gave the estimate on the work at $100,000 and the seller dropped the price by that much. So far I’ve spent about $30,000 on those repairs.

The second one the sellers agent showed the property for over a month but never put it on the MLS and finally I had my buyers agent make an offer on it for full price and the selling agent had to present it to the sellers and they accepted it, but it likely would have gone for much much more given it’s location if it had been on the MLS and now 6 months later I’ve straightened out most of the mismanagement and it’s already worth double what I paid for it.

You can do this! Be patient, positive, and keep making offers! Your GREAT DEAL will come along!

How To Not Get Disgruntled Putting In Offers

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